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HMRC Warning: Up to 6 Weeks to get an SA Tax Reference Print E-mail
Written by Lee Sharpe   
Tuesday, 26 November 2013 00:00

HMRC has published Central Agent Authorisation Team Turnaround Times, warning that posted 64-8s should be sent to HMRC no later than 23 December, and applications for a Self Assessment registration should be sent by 20 December, so as to give CAAT sufficient time to process and/or issue the tax reference necessary in order to make a valid tax return online.

This is, of course, one of the busiest times of the year for agents in the run up to the filing deadline of 31 January.

TaxationWeb’s Mark McLaughlin observed,

HMRC is saying it will take up to 2 weeks to process an online agent authorisation, but up to 5 weeks to process the alternative paper 64-8. I am struggling to see why it should take an extra three weeks to process what is essentially the same information and a relatively simple form, unless perhaps HMRC has set up separate teams for each process, and expects there to be many more paper forms. If that is the case, it seems quite unfair to penalise paper registrations, particularly when agents are trying to help people to get their tax returns in on time – something which HMRC has frequently said is much more important to them than raising penalties.”

2011-12 Tax Gap Figures Published Print E-mail
Written by HM Revenue & Customs   
Monday, 14 October 2013 00:00

Figures recently released by HM Revenue and Customs (HMRC) estimate the tax gap for 2011-12 at 7 per cent (£35 billion) of tax due, continuing a long-term downward trend. 

The tax gap has fallen steadily over the last six years, from 8.3 per cent of tax due in 2005-06 to 7.1 per cent in 2010-11 and 7 per cent in 2011-12. The tax gap is regularly revised to take account of improved methods and the latest available information, and these figures include revisions going back to 2005-06. Alongside existing estimates of the beer and spirits tax gaps, a new estimate for the wine tax gap has been included for the first time.

The tax gap is compiled from around 30 separate estimates for different taxes and is broken down by type of tax, customer group and customer behaviours, including tax evasion and avoidance, customer error, the hidden economy, criminal attacks and where tax cannot be collected because businesses have become insolvent.

The percentage tax gap has fallen very slightly from 7.1 per cent in 2010-11 to 7 per cent in 2011-12. However, the value of the tax gap has increased from £34 billion in 2010-11 to £35 billion in 2011-12, mainly due to an increase in the VAT gap reflecting the rise in the standard rate of VAT to 20 per cent.

Exchequer Secretary David Gauke said:

“These figures show the tax gap is continuing to fall. The vast majority of businesses and individuals pay the taxes they owe. But where they don’t it is for HMRC to challenge non-compliance fiercely, protecting money that would otherwise be lost.

Since 2010, the Government has invested nearly £1 billion in additional compliance initiatives over the Spending Review period. HMRC is on track to secure a further £44 billion in tax revenues over the next two years.”

Edward Troup, HMRC’s Tax Assurance Commissioner and Second Permanent Secretary, said:

“The range of non-compliance behaviours revealed by these tax gap figures underline why it is so important for HMRC to step up our wide-ranging activities against the minority who aren’t paying what’s due, whether they are SMEs, individuals, big business or organised criminals. This isn’t just critical for the nation’s finances: it’s also important to protect the vast majority of honest businesses and individuals from being cheated by the unscrupulous few.”

HMRC Publishes New Tax Gap Figures – What’s the Agenda? Print E-mail
Written by Lee Sharpe   
Monday, 14 October 2013 00:00

HM Revenue & Customs (HMRC) has published new figures for the “Tax Gap”, which is broadly the difference between the tax that HMRC thinks it should have assessed, and that which it has actually collected.

The definition of the “Tax Gap” is arguably more problematic than collating the figures. There is wide disagreement between various parties. But using HMRC’s figures, the Tax Gap is around £35 billion, or about 7% of the total tax estimated to be due. HMRC acknowledges that, in real terms, the Tax Gap actually widened slightly in 2011/12 against the previous year by about £1 billion, although estimated tax revenues increased by a proportionately greater amount thanks to the VAT hike – hence the percentage fall in relative terms.

One might easily infer that HMRC has a vested interest in publicising the Tax Gap, on the basis that it is HMRC that is most directly involved in closing the Gap, and positive results reflect well on HMRC. Certainly its own press release highlighted the small percentage improvement, rather than the absolute increase in the Gap. But HMRC must also realise that the public is becoming sufficiently well informe, that it recognises that the vast majority of individuals and small businesses do not contribute a significant amount to the Gap.

A dialogue has started that the Gap doesn’t recognise some of the substantial losses arguably due to international trading, because they are perfectly within the letter and spirit of the law – as the law now stands.  

I find myself wondering if this is the debate that HMRC would like people to have. Bearing in mind that the more recent changes to make the UK a more attractive place to do business appear to have been driven by the Treasury, and HMRC serves merely to implement what its masters command, it must be hard for HMRC directly to challenge those changes, even when it can see what potential lost revenue lies ahead. Perhaps we shall never know, even if the debate gains momentum and “international taxation” changes as a result. It would certainly be disappointing to find that HMRC’s efforts focus solely on making the figures look good.

Clampdown on Tax Avoidance on UK Property Print E-mail
Written by HM Revenue & Customs   
Monday, 14 October 2013 00:00

Under new regulations, for the first time schemes designed to get around the Annual Tax on Enveloped Dwellings will have to be disclosed to HM Revenue and Customs (HMRC).

The Annual Tax on Enveloped Dwellings (ATED), an annual tax charge on companies owning residential property, came into effect on 1 April 2013 to counter avoidance of Stamp Duty Land Tax on UK residential properties valued over £2 million. Together with the changes to Stamp Duty Land Tax and Capital Gains Tax, ATED is aimed at making sure that owners of high-value properties pay their fair share of tax. It ranges from £15,000 for a property valued between £2 million and £5 million and goes up to £140,000 for properties valued at over £20 million.

The new regulations will mean that schemes designed and marketed to avoid paying this charge will now have to be notified to HMRC.

The Disclosure of Tax Avoidance Schemes (DOTAS) ensures details of schemes designed to provide users with an unfair tax advantage must be provided to HMRC, which uses the information in its compliance work. It also helps Government consider amendments to legislation.

Penalties for not disclosing a scheme are up to £1 million and penalties for users failing to report the use of a scheme on a tax return are £100 for the first failure, £500 for the second and £1,000 for subsequent failures.

Introducing changes to DOTAS, the regulations just laid build on the work from the 2012 “Lifting the Lid”consultation which looked at tackling avoidance schemes. As part of the consultation, the Government proposed revising and extending DOTAS when necessary and improving the information available to HMRC.

These changes add the Annual Tax on Enveloped Dwellings to the regime, where currently schemes designed to reduce a user’s tax bill for income tax, corporation tax, capital gains tax, inheritance tax, national insurance contributions, stamp duty land tax and VAT must be disclosed.

Four Statutory Instruments, which come into effect on 4 November, are being laid before Parliament introducing changes to the DOTAS rules so that, for the first time, schemes that avoid the Annual Tax on Enveloped Dwellings and on employment income are disclosable to HMRC.

The Statutory Instruments also enact the Finance Act 2013 changes that require users of avoidance schemes to tell the scheme promoter their national insurance number and unique taxpayer reference. The promoter is then obliged to give this information to HMRC so that the users of an avoidance scheme can easily be traced.  Regulations have also been introduced to require disclosure of employment income or “disguised remuneration” schemes and, lastly, the confidentiality hallmark for disclosure has been enhanced.

Exchequer Secretary David Gauke said:

“This Government has been clear – aggressive tax avoidance is unacceptable and will not be tolerated. The regulations we are laying mark a significant strengthening of the rules and build on the considerable work we have done to tackle not only tax avoidance schemes but also the promoters of these schemes.

HMRC has been well resourced to tackle tax avoidance and has made it clear that it will pursue those who attempt to avoid their responsibilities.” 

Avoiding the Issue: HMRC Misses the Point of BPRA? Print E-mail
User Rating: / 3
Business Tax
Written by Lee Sharpe   
Monday, 14 October 2013 00:00

TaxationWeb's Lee Sharpe wonders if HMRC's determination to combat tax avoidance has blinded it to the purpose of some legislation.

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